Understanding a good credit score

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Different lenders have different definitions of a “good” credit score, based on the system they are using and therefore there is not set digit to define it.

Nonetheless, if some of the key credit reporting bureaus such as Experian gives you a good credit score, chances are your lender will also rate you well.

Working out a good credit score

Several factors are considered by lenders when you approach them for loans, mortgage, credit cards and other credit facilities. These factors include your credit score information, details you’ve provided in the application form, any prior knowledge they have on you, information of public record (CCJs).

You are termed as a low risk client if your scores are high. You have better chances of getting credit and better rates when you have more points.

Your credit history is assessed from your credit score and aspects like your credit cards debts, mortgage and any defaults in payment are checked.

The reason for this process is to ensure that they will get their money back and also verify that you are an accountable debtor.

The purpose of the Experian credit score is to help you get clarity of your credit report as well as the manner in which you have handled credit in the past will impact your current credit application.

Factors that affect your credit score

If the total balance of your credits, excluding mortgage is low, then you stand better chances of getting a good credit. Work towards staying within credit limits and with low balances.

You should minimize the number of credit application you make to avoid giving lenders an impression that you survive just on credit. Every application is appears on your record for 12months and so if you have made fewer applications in the last six months, the better for you.

Defaulting and making late payments is not good for your credit score. Ensure that all payments are made as scheduled.

Use your current address for voter registration. The lenders will check on the electoral poll to verify where you live and who you are.

Keep tabs on your credit report as often as possible. Ensure it is updated and ready for use for your future credit application.

There is no permanency as far as your Experian credit score is concerned. It can be adjusted, improved and changed to fit with your current financial performance. Working towards getting a high credit score makes it easier and faster for you to access loans and other types of credit at affordable rates.

Basically, if you are responsible in managing your finance, you do not survive on credit, and you are easy to trace, for instance, you name is on the electoral register and you have a confirmed address and credit history, chances are you will get the credit you had applied for.

Factors that do not affect scores on your credit report

There are some factors that are irrelevant when it comes to credit scores. They include factors like gender, race, religion, marital status and age. Your lender may take into account factors like your occupation, employer or salary, even though they do not affect your credit score. Other irrelevant factors include your residence, the previous occupant of your current house and the people who live with you.

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Watch My Wallet has everything you need to know about money, written by real people who’ve been there. Inspired by the philosophy of Early Retirement Extreme (ERE), our goal is to make informed decisions about our finances in order to achieve financial independence.

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Watch My Wallet has everything you need to know about money, written by real people who’ve been there. Inspired by the philosophy of Early Retirement Extreme (ERE), our goal is to make informed decisions about our finances in order to achieve financial independence.